Capital Emerging Markets Total Opportunities Fund (the fund) was
organized on November 18, 2011 as a Delaware statutory trust. The fund is registered under the Investment Company Act of 1940,
as amended, as an open-end management investment company. The fund seeks long-term growth and preservation of capital with lower
volatility of returns than emerging market equities by allocating a portion of its assets to bonds and other debt securities of
emerging market issuers.
Capital Guardian Emerging Markets Total Opportunities Fund for Tax-Exempt Trusts
(the Predecessor Fund) was reorganized and merged into Capital Emerging Markets Total Opportunities Fund, pursuant
to the approval of the trustee of the Predecessor Fund and the board of trustees of the fund on October 26, 2011, and October 20,
2011, respectively. The Predecessor Fund transferred all of its assets and liabilities to the fund, effective at the close of business
January 27, 2012. In connection with the reorganization, the fiscal year-end and tax year-end of the Predecessor Fund was changed
from December 31 to October 31.
The financial statements have been prepared to comply with accounting principles
generally accepted in the United States of America. These principles require management to make estimates and assumptions that
affect reported amounts and disclosures. Actual results could differ from those estimates. The fund follows the significant accounting
policies described below, as well as the valuation policies described in the next section on valuation.
Capital Guardian Trust Company (CGTC), the funds investment
adviser, values the funds investments at fair value as defined by accounting principles generally accepted in the United
States of America. The net asset value of the fund is the value of a single share. The fund calculates its net asset value each
day the New York Stock Exchange is open for trading as of approximately 4 p.m. New York time, the normal close of regular trading.
Equity securities, including depositary receipts, are generally valued at the
official closing price of, or the last reported sale price on, the exchange or market on which such securities are traded, as of
the close of business on the day the securities are being valued or, lacking any sales, at the last available bid price. Prices
for each security are taken from the principal exchange or market on which the security trades.
Fixed-income securities, including short-term securities purchased with more
than 60 days left to maturity, are generally valued at prices obtained from one or more pricing vendors. Vendors value such securities
based on one or more of the inputs described in the following table. The table provides examples of inputs that are commonly relevant
for valuing particular classes of fixed-income securities in which the fund is authorized to invest. However, these classifications
are not exclusive and any of the inputs may be used to value any other class of fixed-income security.
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|
Capital Emerging Markets Total Opportunities Fund
|
17
|
|
|
|
Fixed-income class
|
|
Examples of standard inputs
|
|
|
|
All
|
|
Benchmark yields, transactions, bids, offers, quotations from dealers and trading systems, new issues, spreads and other relationships observed in the markets among comparable securities; and proprietary pricing models such as yield measures calculated using factors such as cash flows, financial or collateral performance and other reference data (collectively referred to as standard inputs)
|
|
|
|
Corporate bonds & notes; convertible securities
|
|
Standard inputs and underlying equity of the issuer
|
|
|
|
Bonds & notes of governments & government agencies
|
|
Standard inputs and interest rate volatilities
|
|
|
|
When the funds investment adviser deems it appropriate to do so (such
as when vendor prices are unavailable or not deemed to be representative), fixed-income securities will be valued in good faith
at the mean quoted bid and ask prices that are reasonably and timely available (or bid prices, if ask prices are not available)
or at prices for securities of comparable maturity, quality and type.
Securities with both fixed-income and equity characteristics, or equity securities
traded principally among fixed-income dealers, are generally valued in the manner described above for either equity or fixed-income
securities, depending on which method is deemed most appropriate by the funds investment adviser. Short-term securities purchased
within 60 days to maturity are valued at amortized cost, which approximates fair value. The value of short-term securities originally
purchased with maturities greater than 60 days is determined based on an amortized value to par when they reach 60 days. Forward
currency contracts are valued at the mean of representative quoted bid and ask prices, generally based on prices supplied by one
or more vendors.
Securities and other assets for which representative market quotations are not
readily available or are considered unreliable by the funds investment adviser are fair valued as determined in good faith
under fair value guidelines adopted by authority of the funds board of trustees as further described below. The investment
adviser follows fair valuation guidelines, consistent with U.S. Securities and Exchange Commission (SEC) rules and
guidance, to consider relevant principles and factors when making fair value determinations. The investment adviser considers relevant
indications of value that are reasonably and timely available to it in determining the fair value to be assigned to a particular
security, such as the type and cost of the security; contractual or legal restrictions on resale of the security; relevant financial
or business developments of the issuer; actively traded similar or related securities; conversion or exchange rights on the security;
related corporate actions; significant events occurring after the close of trading in the security; and changes in overall market
conditions. In addition, the closing prices of equity securities that trade in markets outside U.S. time zones may be adjusted
to reflect significant events that occur after the close of local trading but before the net asset value of the fund is determined.
Fair valuations and valuations of investments that are not actively trading involve judgment and may differ materially from valuations
that would have been used had greater market activity occurred.
Processes and structure
The funds board of trustees has
delegated authority to the funds investment adviser to make fair value determinations, subject to board oversight. The investment
adviser has established a Joint Fair Valuation Committee (the Fair Valuation Committee) to administer, implement and
oversee the fair value process, and to make fair value decisions. The Fair Valuation Committee regularly reviews its own fair value
decisions, as well as decisions made under its standing instructions to the investment advisers valuation teams. The Fair
Valuation Committee reviews changes in fair value measurements from period to period, and may, as deemed appropriate, update the
fair valuation guidelines to better reflect the results of back testing and address new or evolving issues. The Fair Valuation
Committee reports any changes to the fair value guidelines to the board of trustees with supplemental information to support the
changes. The funds board of trustees and audit committee regularly review reports that describe fair value determinations
and methods.
The funds investment adviser has also established a Fixed-Income Pricing Review Group to administer and oversee the fixed-income
valuation process, including the use of fixed-income pricing vendors. This group regularly reviews pricing vendor information and
market data. Pricing decisions, processes and controls over security valuation are also subject to additional internal reviews,
including an annual control self-evaluation program facilitated by the investment advisers compliance group.
Classifications
The funds investment adviser classifies
the funds assets and liabilities into three levels based on the inputs used to value the assets or liabilities. Level 1 values
are based on quoted prices in active markets for identical securities. Level 2 values are based on significant observable market
inputs, such as quoted prices for similar securities and quoted prices in inactive markets. Certain securities trading outside
the U.S. may transfer between Level 1 and Level 2 due to valuation adjustments resulting from significant market movements following
the close of local trading. Level 3 values are based on significant unobservable inputs that reflect the investment advisers
determination of assumptions that market participants might reasonably use in valuing the securities. The valuation levels are
not necessarily an indication of the risk or liquidity associated
|
|
18
|
Capital Emerging Markets Total Opportunities Fund
|
with the underlying investment. For example, U.S. government securities are
reflected as Level 2 because the inputs used to determine fair value may not always be quoted prices in an active market. The following
table presents the funds valuation levels as of October 31, 2012 (dollars in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment securities
|
|
|
|
|
|
|
|
Level 1
|
|
Level 2
1
|
|
Level 3
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bonds and notes
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Latin America
|
|
$
|
|
|
$
|
152,946
|
|
$
|
|
|
$
|
152,946
|
|
Eastern Europe and Middle East
|
|
|
|
|
|
57,612
|
|
|
|
|
|
57,612
|
|
Asia-Pacific
|
|
|
|
|
|
30,762
|
|
|
|
|
|
30,762
|
|
Other markets
|
|
|
|
|
|
23,602
|
|
|
|
|
|
23,602
|
|
Miscellaneous
|
|
|
|
|
|
5,188
|
|
|
|
|
|
5,188
|
|
Equity securities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Asia-Pacific
|
|
|
119,908
|
|
|
|
|
|
|
|
|
119,908
|
|
Other markets
|
|
|
78,437
|
|
|
1,751
|
|
|
|
|
|
80,188
|
|
Miscellaneous
|
|
|
19,880
|
|
|
|
|
|
|
|
|
19,880
|
|
Short-term securities
|
|
|
|
|
|
12,204
|
|
|
|
|
|
12,204
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
218,225
|
|
$
|
284,065
|
|
$
|
|
|
$
|
502,290
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other investments
2
|
|
|
|
|
|
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized appreciation on open forward currency contracts
|
|
$
|
|
|
$
|
136
|
|
$
|
|
|
$
|
136
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized depreciation on open forward currency contracts
|
|
|
|
|
|
(114
|
)
|
|
|
|
|
(114
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
|
|
$
|
22
|
|
$
|
|
|
$
|
22
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1
|
Level 2 includes investment securities with an aggregate value of $1,751,000 that were fair valued under guidelines adopted by authority of the funds board of trustees.
|
2
|
Forward currency contracts are not included in the investment portfolio.
|
4. Principal risks
This section describes the principal risks associated with the funds principal
investment strategies. You may lose money by investing in the fund. The likelihood of loss may be greater if you invest for a shorter
period of time.
Market conditions
The prices of, and the income generated by,
the securities held by the fund may decline due to market conditions and other factors, including those directly involving the
issuers of securities held by the fund.
Investing in growth-oriented stocks
Growth-oriented stocks may
involve larger price swings and greater potential for loss than other types of investments. These risks may be even greater in
the case of smaller capitalization stocks.
Investing in income-oriented stocks
Income provided by the fund
may be reduced by changes in the dividend policies of, and the capital resources available at, the companies in which the fund
invests.
Investing outside the United States
Securities of issuers domiciled
outside the United States, or with significant operations outside the United States, may lose value because of adverse political,
social, economic or market developments in the countries or regions in which the issuer operates. These securities may also lose
value due to changes in foreign currency exchange rates against the U.S. dollar and/or currencies of other countries. Securities
markets in certain countries may be more volatile and/or less liquid than those in the United States. Investments outside the United
States may also be subject to different settlement and accounting practices and different regulatory, legal and reporting standards,
and may be more difficult to value, than those in the United States. The risks of investing outside the United States may be heightened
in connection with investments in emerging markets.
Investing in emerging markets
Investing in emerging markets may
involve risks in addition to and greater than those generally associated with investing in developed countries. For instance, developing
countries may have less developed legal and accounting systems than those in developed countries. The governments of these countries
may be less stable and more likely to impose capital controls, nationalize a company or industry, place restrictions on foreign
ownership and on withdrawing
|
|
Capital Emerging Markets Total Opportunities Fund
|
19
|
sale proceeds of securities from the country, and/or impose punitive taxes that
could adversely affect the prices of securities. In addition, the economies of these countries may be dependent on relatively few
industries that are more susceptible to local and global changes. Securities markets in these countries can also be relatively
small and have substantially lower trading volumes. As a result, securities issued in these countries may be more volatile and
less liquid, and may be more difficult to value, than securities issued in countries with more developed economies and/or markets.
Additionally, there may be increased settlement risks for transactions in local securities.
Investing in bonds
Rising interest rates will generally cause
the prices of bonds and other debt securities to fall. Longer maturity debt securities may be subject to greater price fluctuations
than shorter maturity debt securities. In addition, falling interest rates may cause an issuer to redeem, call or refinance a security
before its stated maturity, which may result in the fund having to reinvest the proceeds in lower yielding securities.
Bonds and other debt securities are subject to credit risk, which is the possibility
that the credit strength of an issuer will weaken and/or an issuer of a debt security will fail to make timely payments of principal
or interest and the security will go into default. Credit risk is gauged, in part, by the credit ratings of the securities in which
the fund invests. However, ratings are only the opinions of the rating agencies issuing them and are not guarantees as to credit
quality or an evaluation of market risk.
Investing in lower rated bonds
Lower rated bonds and other lower
rated debt securities generally have higher rates of interest and involve greater risk of default or price declines due to changes
in the issuers creditworthiness than those of higher quality debt securities. The market prices of these securities may fluctuate
more than the prices of higher quality debt securities and may decline significantly in periods of general economic difficulty.
These risks may be increased with respect to lower quality, higher yielding debt securities (rated Ba1 or below or BB+ or below
by Nationally Recognized Statistical Rating Organizations designated by the funds investment adviser or unrated but determined
to be of equivalent quality by the funds investment adviser). Such securities are sometimes referred to as junk bonds.
Junk bonds are considered speculative.
Thinly traded securities
There may be little trading in the secondary
market for particular bonds or other debt securities, which may make them more difficult to value, acquire or sell.
Management
The investment adviser to the fund actively manages
the funds investments. Consequently, the fund is subject to the risk that the methods and analyses employed by the investment
adviser in this process may not produce the desired results. This could cause the fund to lose value or its investment results
to lag relevant benchmarks or other funds with similar objectives.
Your investment in the fund is not a bank deposit and is not insured or guaranteed
by the Federal Deposit Insurance Corporation or any other governmental agency, entity or person. You should consider how the fund
fits into your overall investment program.
5. Taxation and distributions
Federal income taxation
The fund complies with the requirements
under Subchapter M of the Internal Revenue Code applicable to regulated investment companies and intends to distribute substantially
all of its net taxable income and net capital gains each year. The fund is not subject to income taxes to the extent such distributions
are made. Therefore, no federal income tax provision is required.
As of and during the period ended October 31, 2012, the fund did not have a
liability for any unrecognized tax benefits. The fund recognizes interest and penalties, if any, related to unrecognized tax benefits
as income tax expense in the statement of operations. During the period, the fund did not incur any interest or penalties.
The fund is not subject to examination by U.S. federal tax authorities, by state tax authorities and by tax authorities outside
the U.S. for tax years before 2012, the year the fund commenced operations.
Non-U.S. taxation
Dividend and interest income are recorded net
of non-U.S. taxes paid. Gains realized by the fund on the sale of securities in certain countries are subject to non-U.S. taxes.
When the fund is taxed on either realized and/or unrealized capital gains, the fund will accrue for non-U.S. taxes as applicable.
As of October 31, 2012, the fund accrued $4,000 of liabilities for non-U.S. taxes on realized and unrealized gains.
Distributions
Distributions paid to shareholders are based on
net investment income and net realized gains determined on a tax basis, which may differ from net investment income and net realized
gains for financial reporting purposes. These differences are due primarily to different treatment for items such as currency gains
and losses; capital losses related to sales of certain securities within 30 days of purchase; paydowns on fixed-income securities;
cost of investments sold; net capital losses; unrealized appreciation of certain investments in securities outside the U.S.; short-term
capital gains and losses; and income on certain investments.
|
|
20
|
Capital Emerging Markets Total Opportunities Fund
|
The fiscal year in which amounts are distributed may differ from the year in
which the net investment income and net realized gains are recorded by the fund for financial reporting purposes. For the period
from January 27, 2012 (commencement of operations) through October 31, 2012, there were no distributions paid to shareholders.
The fund may designate a portion of the amount paid to redeeming shareholders as distribution for tax purposes.
During the period ended October 31, 2012, the fund reclassed $1,838,000 from
undistributed net investment income to accumulated net realized loss, $90,000 from undistributed net investment income to capital
paid in on shares of capital stock and $1,584,000 from accumulated net realized loss to capital paid in on shares of capital stock
to align financial reporting with tax reporting.
As of October 31, 2012, the tax basis components of distributable earnings,
unrealized appreciation (depreciation) and cost of investment securities were as follows:
|
|
|
|
|
|
|
(dollars in thousands)
|
|
|
|
|
|
|
Undistributed ordinary income
|
|
$
|
12,284
|
|
Capital loss carryforward*
|
|
|
(3,445
|
)
|
|
|
|
|
|
Gross unrealized appreciation on investment securities
|
|
|
40,005
|
|
Gross unrealized depreciation on investment securities
|
|
|
(21,497
|
)
|
|
|
|
|
|
Net unrealized appreciation on investment securities
|
|
|
18,508
|
|
|
|
|
|
|
Cost of investment securities
|
|
|
483,782
|
|
|
|
*
|
The capital loss carryforward will be used to offset any capital gains realized by the fund in future years. The fund will not make distributions from capital gains while a capital loss carryforward remains.
|
6. Fees and transactions with related parties
CGTC serves as investment adviser to the fund and other funds. CGTC is wholly
owned by Capital Group International, Inc., which is wholly owned by The Capital Group Companies, Inc. Expense limitations have
been imposed through December 31, 2013, to limit the funds total annual fund operating expenses to 1.10% (as a percentage
of average daily net assets).
Investment advisory services fee
The Investment Advisory and Service
Agreement with CGTC provides for monthly fees accrued daily. The fee is 1.00% of the average daily net assets of the fund.
Distribution services
American Funds Distributors,® Inc. (AFD)
is the principal underwriter of the funds shares. AFD does not receive any compensation related to the sale of shares of
the fund.
Affiliated officers and trustees
Officers and certain trustees
of the fund are or may be considered to be affiliated with CGTC and AFD. No affiliated officers and trustees received any compensation
directly from the fund.
7. Restricted securities
The fund has invested in certain securities for which resale may be limited
(for example, in the United States, to qualified institutional buyers) or which are otherwise restricted. These securities are
identified in the investment portfolio. As of October 31, 2012, the total value of restricted securities was $28,882,000, which
represents 5.58% of the net assets of the fund.
8. Investment transactions and other disclosures
The fund made purchases and sales of investment securities, excluding short
term securities, of $304,307,000 and $175,198,000, respectively, during the period from January 27, 2012 (commencement of operations)
through October 31, 2012.
9. Fund merger
On January 27, 2012, the fund acquired all of the assets and assumed all of
the liabilities of the Predecessor Fund pursuant to a plan of reorganization approved by the trustee of the Predecessor Fund and
the board of trustees of the fund on October 26, 2011, and October 20, 2011. The fund began with a $100,000 seed investment. The
acquisition was accomplished by a tax-free exchange as follows:
On the close of business on January 27, 2012, 35,113,792 shares of the Predecessor
Fund, valued at $386,996,070, were outstanding. After the reorganization, the fund had 35,122,866 shares valued at $387,096,070.
The investment portfolio of the Predecessor Fund, with a value of $377,210,268
and identified cost of $370,087,014 were the principal assets acquired by the fund. For financial reporting purposes, assets received
and shares issued by the fund were recorded at fair value; however, the cost basis of the investments received from the Predecessor
Fund was carried forward to align ongoing reporting of the funds realized and unrealized gains and losses with amounts distributable
to shareholders for tax purposes. Immediately prior to the merger, the net assets of the Predecessor Fund were $386,996,070.
|
|
Capital Emerging Markets Total Opportunities Fund
|
21
|
Because the combined investment portfolios have been managed
as a single integrated portfolio since the merger was completed, it is not practicable to separate the amounts of revenue and earnings
of the Predecessor Fund that have been reflected in the statement of operations since January 27, 2012, for the fund.
|
|
|
|
|
|
|
|
|
|
|
|
|
Before reorganization
|
|
|
|
After reorganization
|
|
|
|
|
|
|
|
|
|
|
|
The Predecessor Fund
|
|
The fund
|
|
The fund
|
|
|
|
|
|
|
|
|
|
|
Net assets
|
|
$
|
386,996,070
|
|
$
|
100,000
|
|
$
|
387,096,070
|
|
Shares outstanding
|
|
|
35,113,792
|
|
|
|
|
|
35,122,866
|
|
Net asset value per share
|
|
$
|
11.02
|
|
$
|
|
|
$
|
11.02
|
|
Net unrealized appreciation/(depreciation)
|
|
|
6,187,269
|
|
|
|
|
|
6,187,269
|
|
10. Forward currency contracts
The fund has entered into forward currency contracts, which
represent agreements to exchange currencies on specific future dates at predetermined rates. The funds investment adviser
uses forward currency contracts to manage the funds exposure to changes in exchange rates. Upon entering into these contracts,
risks may arise from the potential inability of counterparties to meet the terms of their contracts and from possible movements
in exchange rates.
On a daily basis, the Fund values forward currency contracts
based on the applicable exchange rates and records unrealized appreciation or depreciation for open forward currency contracts
in the funds statement of assets and liabilities. Realized gains or losses at the time the forward currency contract is closed
or offset by another contract with the same broker for the same settlement date and currency. Closed forward currency contracts
that have not reached their settlement date are included in the respective receivables or payables for closed forward currency
contracts in the funds statement of assets and liabilities. Net realized gains or losses from closed forward currency contracts
and net unrealized appreciation or depreciation from open forward currency contracts are recorded in the funds statement
of operations.
As of October 31, 2012, the fund had open forward currency
contracts to sell currencies, as shown on the following table. The open forward currency contracts shown are generally indicative
of the volume of activity for the year (as a percentage of the funds total net assets).
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Contract amount
(000)
|
|
U.S. valuation
(000)
|
|
|
|
|
|
|
|
|
|
|
|
Counterparty
|
|
Non-U.S.
|
|
U.S.
|
|
Amount
|
|
Unrealized
(depreciation)/
appreciation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Australian dollar to U.S. dollar
expiring 11/5/2012
|
|
Bank of America
|
|
AUD192
|
|
$
|
197
|
|
$
|
199
|
|
$
|
(2
|
)
|
Brazilian real to U.S. dollar
expiring 11/19/2012
|
|
JPMorgan Chase
|
|
BRL39,859
|
|
|
19,519
|
|
|
19,580
|
|
|
(61
|
)
|
British pound to U.S. dollar
expiring 11/9/2012
|
|
JPMorgan Chase
|
|
GBP575
|
|
|
932
|
|
|
928
|
|
|
4
|
|
British pound to U.S. dollar
expiring 11/20/2012
|
|
Bank of New York Mellon
|
|
GBP5,567
|
|
|
8,983
|
|
|
8,983
|
|
|
|
*
|
Czech koruna to U.S. dollar
expiring 11/15/2012
|
|
Bank of America
|
|
CZK6,818
|
|
|
355
|
|
|
353
|
|
|
2
|
|
Euro to U.S. dollar
expiring 11/20/2012
|
|
Bank of New York Mellon
|
|
EUR2,122
|
|
|
2,780
|
|
|
2,751
|
|
|
29
|
|
Euro to U.S. dollar
expiring 11/2011/28/2012
|
|
JPMorgan Chase
|
|
EUR4,102
|
|
|
5,346
|
|
|
5,318
|
|
|
28
|
|
Korean won to U.S. dollar
expiring 11/30/2012
|
|
Bank of America
|
|
KRW5,048,438
|
|
|
4,594
|
|
|
4,622
|
|
|
(28
|
)
|
South African Rand to U.S. dollar
expiring 11/9/2012
|
|
Credit Suisse First Boston
|
|
ZAR34,358
|
|
|
4,030
|
|
|
3,959
|
|
|
71
|
|
South African Rand to U.S. dollar
expiring 11/30/2012
|
|
UBS AG
|
|
ZAR21,518
|
|
|
2,473
|
|
|
2,471
|
|
|
2
|
|
Turkish Lira to U.S. dollar
expiring 11/19/2012
|
|
Credit Suisse First Boston
|
|
TRY5,521
|
|
|
3,050
|
|
|
3,073
|
|
|
(23
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Forward currency contracts net
|
|
|
|
|
|
|
|
|
|
|
|
$
|
22
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
*Amount less than one thousand.
22 Capital Emerging Markets Total Opportunities Fund
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the period
January 27, 2012
through
October 31, 2012
1
|
|
For the period
January 1, 2012
through
January 26, 2012
2
|
|
For the
year ended
December 31, 2011
2
|
|
For the period
March 1, 2010
3
through
December 31, 2010
2
|
|
|
|
|
|
|
|
|
|
|
|
Net asset value, beginning of period
|
|
$
|
11.02
|
|
$
|
10.45
|
|
$
|
11.12
|
|
$
|
10.00
|
|
From investment operations
4
:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net investment income
|
|
|
.35
|
|
|
.03
|
|
|
.52
|
|
|
.45
|
|
Net realized and unrealized gain (loss)
|
|
|
.21
|
|
|
.54
|
|
|
(1.19
|
)
|
|
.67
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total from investment operations
|
|
|
.56
|
|
|
.57
|
|
|
(.67
|
)
|
|
1.12
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net asset value, end of period
|
|
$
|
11.58
|
|
$
|
11.02
|
|
$
|
10.45
|
|
$
|
11.12
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total return
|
|
|
5.08
|
%
|
|
5.45
|
%
|
|
(6.03
|
)%
|
|
11.20
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net assets, end of period (in millions)
|
|
$
|
518
|
|
$
|
387
|
|
$
|
381
|
|
$
|
282
|
|
|
Ratios/Supplemental data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ratio of expenses to average net assets
|
|
|
1.10
|
%
5
|
|
.05
|
%
5
|
|
.04
|
%
|
|
.08
|
%
5
|
Ratio of net investment income to average net assets
|
|
|
4.11
|
%
5
|
|
3.95
|
%
5
|
|
4.78
|
%
|
|
5.07
|
%
5
|
Portfolio turnover rate
|
|
|
42.49
|
%
6
|
|
7.00
|
%
6
|
|
59.52
|
%
7
|
|
69.40
|
%
6, 7
|
|
|
1
|
The fund commenced operations as a Registered Investment Company on January 27, 2012.
|
2
|
Capital Guardian Emerging Markets Total Opportunities Common Trust Fund (the Predecessor Fund) was reorganized into the Capital Emerging Markets Total Opportunities Fund at the close of business effective January 26, 2012.
|
3
|
The Predecessor Fund commenced operations on March 1, 2010.
|
4
|
The pershare/unit data is based on average shares/units outstanding.
|
5
|
Annualized.
|
6
|
Based on operations for the period shown (unless otherwise noted) and, accordingly, may not be representative of a full year.
|
7
|
Unaudited.
|
Capital Emerging Markets Total Opportunities Fund 23
|
Report of Independent Registered Public Accounting Firm
|
|
To the Shareholders and Board of Trustees of Capital Emerging Markets Total
Opportunities Fund:
We have audited the accompanying statement of assets and liabilities of Capital
Emerging Markets Total Opportunities Fund (the Fund), including the schedule of investments, as of October 31, 2012,
and the related statement of operations for the period January 27, 2012 (commencement of operations) to October 31, 2012, and the
statements of changes in net assets and financial highlights for the period January 1, 2012 through January 26, 2012 and for the
period January 27, 2012 (commencement of operations) to October 31, 2012. These financial statements and financial highlights are
the responsibility of the Funds management. Our responsibility is to express an opinion on these financial statements and
financial highlights based on our audits. The statement of changes in net assets and the financial highlights for the year ended
December 31, 2011 and the financial highlights for the period March 1, 2010 through December 31, 2010 were audited by other auditors
whose reports, dated March 5, 2012 and March 7, 2011, respectively, expressed an unqualified opinion on those statements.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those
standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. The Fund is not required to have, nor were we engaged to perform, an audit
of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting
as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion
on the effectiveness of the Funds internal control over financial reporting. Accordingly, we express no such opinion. An
audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement
presentation. Our procedures included confirmation of securities owned as of October 31, 2012, by correspondence with the custodian
and brokers; where replies were not received from brokers, we performed other auditing procedures. We believe that our audit provides
a reasonable basis for our opinion.
In our opinion, such financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of Capital Emerging Markets Total Opportunities Fund
as of October 31, 2012, the results of its operations for the year then ended, and the changes in its net assets and financial
highlights for the period January 1, 2012 through January 26, 2012 and for the period January 27, 2012 (commencement of operations)
through October 31 2012, in conformity with accounting principles generally accepted in the United States of America.
DELOITTE & TOUCHE LLP
Costa Mesa, California
December 28, 2012
|
|
24
|
Capital Emerging Markets Total Opportunities Fund
|
|
|
Expense example
|
unaudited
|
|
|
As a shareholder of the fund, you incur ongoing costs, including investment
advisory services fees and other expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing
in the fund so you can compare these costs with the ongoing costs of investing in other mutual funds. The example is based on an
investment of $1,000 invested at the beginning of the period and held for the entire period.
Actual expenses:
The first line of the table below provides information about actual account values and actual expenses. You may use the information
in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your
account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number
in the first line under the heading entitled Expenses paid during period to estimate the expenses you paid on your
account during this period.
Hypothetical example for comparison purposes:
The second line of the table below provides information about hypothetical account values and hypothetical expenses based on the
funds actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the funds actual
return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses
you paid for the period. You may use this information to compare the ongoing costs of investing in the fund and other funds. To
do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other
funds.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning
account value
4/30/2012
|
|
Ending
account value
10/31/2012
|
|
Expenses
paid during
period
*
|
|
Annualized
expense
ratio
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Actual return
|
|
$
|
1,000.00
|
|
$
|
1,024.78
|
|
$
|
5.60
|
|
|
1.10
|
%
|
Hypothetical 5% return before expenses
|
|
|
1,000.00
|
|
|
1,019.61
|
|
|
5.58
|
|
|
1.10
|
|
*
The expenses paid during period are equal to the annualized
expense ratio, multiplied by the average account value over the period, multiplied by the number of days in the period, and
divided by 366 (to reflect the current period).
|
|
Tax information
|
unaudited
|
|
|
We are required to advise you of the federal tax status of certain distributions
received by shareholders during the fiscal year. The fund hereby designates the following amounts for the period January 27, 2012
(commencement of operations) through October 31, 2012:
|
|
|
|
|
Foreign taxes
|
|
$
|
0.01 per share
|
|
|
|
|
|
|
Foreign source income
|
|
$
|
0.40 per share
|
|
|
|
|
|
|
Qualified dividend income
|
|
|
100
|
%
|
|
|
|
|
|
Individual shareholders should refer to their Form 1099 or other tax information,
which will be mailed in January 2013, to determine the
calendar year
amounts to be included on their 2012 tax returns. Shareholders
should consult their tax advisers.
|
|
Capital Emerging Markets Total Opportunities Fund
|
25
|
|
|
|
|
|
|
|
|
|
Board of trustees and other officers
|
|
Independent trustees
1
|
|
|
|
|
|
|
|
|
|
Name and age
|
|
Year first elected
a trustee
of the fund
2
|
|
Principal occupation(s) during past five years
|
|
Number of portfolios
3
overseen by trustee
|
|
Other directorships
4
held by trustee
|
|
|
|
|
|
|
|
|
|
Richard G. Capen, Jr., 78
(Lead independent trustee)
|
|
2011
|
|
Corporate director and author
|
|
1
|
|
Capital Private Client Services Funds
|
|
|
|
|
|
|
|
|
|
H. Frederick Christie, 79
|
|
2011
|
|
Private investor
|
|
1
|
|
Capital Private Client Services Funds
|
|
|
|
|
|
|
|
|
|
Martin Fenton, 77
|
|
2011
|
|
Chairman, Senior Resource Group LLC (development and management of senior living communities)
|
|
1
|
|
Capital Private Client Services Funds
|
|
|
|
|
|
|
|
|
|
Richard G. Newman, 78
|
|
2011
|
|
Chairman Emeritus of the Board and Consultant, AECOM Technology Corporation (global engineering, consulting and professional technical services)
|
|
1
|
|
Capital Private Client Services Funds
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interested trustee
5
|
|
|
|
|
|
|
|
|
|
Name, age and position with fund
|
|
Year first elected a trustee or officer of the fund
2
|
|
Principal occupation(s) during past five years and positions held with affiliated entities or the principal underwriter of the fund
|
|
Number of portfolios
3
overseen by trustee
|
|
Other directorships
4
held by trustee
|
|
|
|
|
|
|
|
|
|
Paul F. Roye, 59
Chairman of the Board
|
|
2011
|
|
Senior Vice President Fund Business Management Group, Capital Research and Management Company; Director, American Funds Service Company
7
|
|
1
|
|
Capital Private Client Services Funds
|
The funds statement of additional information includes further details
about fund trustees and is available without charge upon request by calling Capital Guardian Trust Company at 800/266-9532. The
address for all trustees and officers of the fund is 6455 Irvine Center Drive, Irvine, CA 92618, Attention: Secretary.
|
|
26
|
Capital Emerging Markets Total Opportunities Fund
|
|
|
|
|
|
Other officers
|
|
Name, age and position with fund
|
|
Year first elected
an officer
of the fund
2
|
|
Principal occupation(s) during past five years and positions held
with affiliated entities or the principal underwriter of the fund
|
|
|
|
|
|
John B. Emerson, 58
President
|
|
2011
|
|
Senior Vice President, Capital Guardian Trust Company;
President Private Client Services Division, Capital Guardian Trust Company;
Chairman of the Board, Capital Guardian Trust Company, a Nevada Corporation (CGTN)
7
|
|
|
|
|
|
Shelby Notkin, 71
Senior Vice President
|
|
2011
|
|
Senior Vice President, Capital Guardian Trust Company;
Chairman of the Board Private Client Services Division, Capital Guardian Trust Company; Director, Capital Guardian Trust Company, a Nevada Corporation (CGTN)
7
|
|
|
|
|
|
John R. Queen, 47
Senior Vice President
|
|
2011
|
|
Vice President, Capital Guardian Trust Company;
Senior President Private Client Services Division, Capital Guardian Trust Company;
Vice President Fixed Income, Capital Research and Management Company
7
|
|
|
|
|
|
Timothy W. McHale, 34
Vice President
|
|
2011
|
|
Associate Counsel Fund Business Management Group, Capital Research and Management Company;
7
Secretary, American Funds Distributors, Inc.
7
|
|
|
|
|
|
Courtney R. Taylor, 37
Secretary
|
|
2011
|
|
Assistant Vice President Fund Business Management Group, Capital Research and Management Company
7
|
|
|
|
|
|
Kevin M. Saks, 40
Treasurer
|
|
2011
|
|
Vice President, Capital Guardian Trust Company;
Senior Vice President Private Client Services Division, Capital Guardian Trust Company; Director, Capital Guardian Trust Company, a Nevada Corporation (CGTN)
7
|
|
|
|
|
|
Susan K. Countess, 46
Assistant Secretary
|
|
2012
|
|
Associate Fund Business Management Group, Capital Research and Management Company
7
|
|
|
|
|
|
Susan R. Sunga, 57
Assistant Treasurer
|
|
2011
|
|
Vice President, Capital Guardian Trust Company;
Senior Manager Private Client Services Division, Capital Guardian Trust Company;
Tax Officer, Capital Guardian Trust Company, a Nevada Corporation (CGTN)
7
|
|
|
1
|
The term independent trustee refers to a trustee who is not an interested person of the fund within the meaning of the Investment Company Act of 1940.
|
2
|
Trustees and officers of the fund serve until their resignation, removal or retirement.
|
3
|
Capital Emerging Markets Total Opportunities Fund.
|
4
|
This includes all directorships (other than those in Capital Emerging Markets Total Opportunities Fund) that are held by each trustee as a trustee or director of a public company or a registered investment company. Unless otherwise noted, all directorships are current.
|
5
|
Interested persons of the fund within the meaning of the Investment Company Act of 1940, on the basis of their affiliation with the funds investment adviser, Capital Guardian Trust Company, or affiliated entities (including the funds principal underwriter).
|
6
|
All of the officers listed are officers and/or directors/trustees of one or more of the other funds for which Capital Guardian Trust Company serves as investment adviser.
|
7
|
Company affiliated with Capital Guardian Trust Company.
|
|
|
Capital Emerging Markets Total Opportunities Fund
|
27
|
|
Offices of the fund and of the
|
investment adviser
|
Capital Guardian Trust Company
|
6455 Irvine Center Drive
|
Irvine, CA 92618
|
|
Transfer agent for
|
shareholder accounts
|
J.P. Morgan Investor Services Company
|
One Beacon Street
|
Boston, MA 02108
|
|
Custodian of assets
|
JPMorgan Chase Bank
|
270 Park Avenue
|
New York, NY 10017-2070
|
|
Counsel
|
Bingham McCutchen LLP
|
355 South Grand Avenue, Suite 4400
|
Los Angeles, CA 90071-3106
|
|
Independent registered public accounting firm
|
Deloitte & Touche LLP
|
695 Town Center Drive
|
Suite 1200
|
Costa Mesa, CA 92626-7188
|
|
Principal underwriter
|
American Funds Distributors, Inc.
|
333 South Hope Street
|
Los Angeles, CA 90071-1406
|
Investors should carefully consider investment objectives, risks, charges
and expenses. This and other important information is contained in the fund prospectus, which can be obtained from Capital Guardian
Trust Company by calling 800/266-9532 and should be read carefully before investing.
Capital Emerging Markets Total Opportunities Fund files a complete list of its
portfolio holdings with the U.S. Securities and Exchange Commission (SEC) for the first and third quarters of each fiscal year
on Form N-Q. This filing is available free of charge on the SEC website (www.sec.gov). You may also review or, for a fee, copy
this filing at the SECs Public Reference Room in Washington, D.C. Additional information regarding the operation of the Public
Reference Room may be obtained by calling the SECs Office of Investor Education and Advocacy at 800/SEC-0330. Additionally,
the list of portfolio holdings is available by calling Capital Guardian Trust Company at 800/266-9532.
The proxy voting procedures and policies of Capital Emerging Markets Total Opportunities
Fund which describe how we vote proxies relating to portfolio securities is available upon request by calling Capital
Guardian Trust Company at 800/266-9532. The fund files its proxy voting record with the SEC for the 12 months ended June 30 by
August 31. The report also is available on the SEC website or by calling Capital Guardian Trust Company.
This report is for the information of shareholders of Capital Emerging Markets
Total Opportunities Fund, but it also may be used as sales literature when preceded or accompanied by the current prospectus, which
gives details about charges, expenses, investment objectives and operating policies of the fund. If used as sales material after
December 31, 2012, this report must be accompanied by a statistical update for the most recently completed calendar quarter.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The Capital Group Companies
|
|
|
|
|
|
Capital International
|
|
Capital Guardian
|
|
Capital Research and Management
|
|
Capital Bank and Trust
|
|
American Funds
|